When I first noticed the FuelCell Energy (NASDAQ:FCEL) filing about director James D. Gerson resigning at age 71 after 22 years on the board, my initial reaction was one figuring that he was simply retiring. After all, the filing states in part, "The Board accepted Mr. Gerson's resignation and reaffirmed its support for the company's strategy and management." That sounds like a reasonable assumption at first, but boy was I wrong.
If you scroll down in the same filing at the bottom you can find the "Letter of resignation." Two things you can learn from it. First, after 22 years, he quit with no notice apparently. The letter says "effective today" though it's theoretically possible he had been preparing the board for his departure well in advance. The second part is more disturbing, however. It states,
"For some time I have advised the Chairman of the company, the Board of Directors and the management of the company of what I view as a failure to adequately address the limited domestic sales of fuel cells. Having been unable to effect any material changes, I resigned."
His letter was dated exactly one week before Christmas and halfway through the fiscal first quarter. I think it's safe to say the current quarter isn't exactly going gangbusters, and Gerson doesn't have too much confidence in management to get results to improve much. I would like to think Gerson thought and fought long and hard before packing in a 22-year relationship and leaving on what appears to be bad terms. Gerson is basically telling you not to expect any "material changes" with the current quarter or the foreseeable future.
This event is much in line with my first FCEL article entitled FuelCell Energy Has A Major Credibility Problem, my second FCEL article entitled How Do You Justify FuelCell Energy's High Valuation?, and my most recent FCEL article entitled Update: FuelCell Energy Earnings Beat Estimates, But The Valuation Still Hard To Stomach, and I continue to avoid FCEL at any price. As I concluded in the most recent piece and feel this way even more so,
"Given the tiny sales quarter after quarter and not much (if any) forward-looking statements from management about things changing, I continue to find it impossible to justify FCEL's high valuation."
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